Quoting some fella, Ruto’s economic guru David Ndii told Kenyans to pay taxes as required by Ruto and shut up.
“And do the numbers. As Sam Rayburn said ‘’any jackass can kick down a barn but it takes a carpenter to build one’,” Ndii tweeted.
According to media reports, the chairperson of President William Ruto’s Council of Economic Advisors David Ndii has hit out at leaders criticizing the government’s taxation plans in the next financial year.
Ndii asked people with issues with Finance Bill 2023 to sit down and write an alternative budget that is cushioned from external shocks without International Monetary Fund (IMF).
The Finance Bill 2023 also proposes a raft of taxes that will have a major impact on Kenya’s digital content creators and owners of platforms that facilitate the trading of digital assets.
The proposal includes a 15 percent withholding tax on payments related to the monetization of digital content, which will significantly impact the thousands of young people who make their living in the digital space.
Also, any person who receives rental income on behalf of the owner of the premises shall deduct tax and within 24 hours remit the amount to the taxman.
This cuts the period the rental income tax is paid from the 20th day of the month, as has been the case.
Tom Mshindi a former editor of the Daily Nation summarizes the 2023/24 tax proposals in clear terms.
“The pain for the rest of the earners remains the same: Earners of up to Sh24,000 still pay 10 percent as tax; 25 percent tax on the next Sh8,333 and 30 percent for those earning Sh32,333 up to Sh499,999. Above that the 35 per cent tax will now kick in. Cynics will argue that those earning at this level should not complain too much but that would be unfair because they still bear a proportionately higher rate of taxation because of their lifestyles”
Ndii’s arrogance and rudeness aside, Ruto’s first budget focuses more on taxing Kenyans than anything else.
What Kenyans get from the tax money they pay does not seem to be of any concern or interest to Ruto and his government. The emphasis, according to Ruto’s own finance boss, is on how to pay debts and loans. What those loans that Kenyans are paying taxes for have done to the citizen taxpayers is equally irrelevant to the Ruto regime.
Treasury is proposing a range of taxes starting with PAYE be graduated to 35 percent for individuals earning more than Ksh.500,000 from the current 30 percent in its efforts to expand the tax base. As noted PAYE goes from 10% to 25 % and now is going to be topped at 35% for big earners.
The reality is much more simpler than all the talk from the Treasury. The bulk of Kenyan PAYE taxes comes from the low and middle-income earners. As a matter of fact, that is where the bulk of Kenya’s Revenue comes from. The rich people who earn more than Sh. 500,000 are the politicians, from the MPs to the big boys on top and they pay zero tax.
Apart from that, they have endless benefits from cars and housing to huge traveling allowance money, non of which is taxable in any form. That is minor compared to what the politicians actually just steal from the Kenyan taxpayers.
One aspect of the new tax proposals which I find is designed to fail for the benefit of rich Kenyans is the proposal for rental taxes.
“Any person who receives rental income on behalf of the owner of the premises shall deduct tax and within 24 hours remit the amount to the taxman”.
Why put the responsibility of collecting and remitting rental taxes on employees instead of putting it on the landowners themselves? And by the way, what is the tax rate on rental income? There is nothing like that because rental income is taxed as part of the total income of the landowner.
So if you own a house that earns you Sh. 1 million a year, that income is added to your other income to determine how much tax you pay overall. So how the heck is someone going to determine how much tax to deduct from the rental income of a landowner who also earns money as an MP, DP, or president of the country or any other income?
If you own rental homes under a registered business, then the tax is calculated like all taxes at the end of the year, doing an income statement and a balance sheet to determine how much profit your rental company made and the company pays taxes on that at the corporate income tax rate.
The idea as being proposed by Ruto and his Treasury that anyone receiving rental income for their boss should deduct taxes and remit it in 24 hours is ridiculously stupid. Let’s say you get Sh. 100,000 a month from rent, how much of that is tax? Do we have a tax rate for gross rent revenue? No, we don’t. So why make useless proposals going nowhere?
It is because the biggest tax thieves in Kenya are landlords who rent thousands of houses to Kenyans and make billions in revenue but never pay a penny in tax and most of them are the political lords of our country and other very rich people in the country. President Ruto himself owns homes and houses everywhere in Kenya from Eldoret, Nakuru, Nairobi, Mombasa, and everywhere else.
How much tax does Ruto pay from his rental income? Nothing. That is the gift of being a rich landlord in Kenya. You pay no tax at all and now the Ruto chaps are coming up with some toothless gimmick on how to tax landlords which amounts to nothing.
Here is what Ruto’s nominees claimed their wealth as of now stands.
Of course, we know the real numbers are more than double what they voluntarily declare. One very telling matter here is that when all these Ruto nominees declared how much wealth they have, none of them provided their income tax returns on that wealth. Why? Because they do not pay taxes.
But the big issue is that most of the wealth the nominees and other politicians own is from houses and commercial buildings, most of which they grabbed. These people do not own shares in legit companies and none of them has ever built any credible company or business entity in Kenya.
So the question is how much rental tax do these big shots pay from the endless amount of money they earn from rent? Absolutely nothing. Ruto knows that because he is one of them and does the same with his rental income.
I had an interesting argument with one of my good friends who was a fellow student activist and works with Mudavadi, who is worth billions of cash. I asked him how much money Mudavadi pays in rental tax. My friend laughed because he is a very nice guy and he told me, Adongo, you are only mad with Mudavadi because he is very rich and you are a poor guy. I told him not to mind about my income but tell me and Kenyans how much his buddy Mudavadi pays on rental tax alone. He asked me why I was picking on Mudavadi.
I explained to my friend that Mudavadi during his time in the Moi cabinet was reputed to have grabbed more houses and buildings in Nairobi and Kenya than anybody else, so I wanted to know if he is paying any taxes on that.
The point here is that the richest people in Kenya mainly politicians never pay taxes.
In fact, when the government proposes a 35% tax rate for those earning more than Sh. 5000,000 they are just joking. Very few Kenyans earn that amount of money and those who do are too important to be taxed. Only landlords making huge money from commercial and household rent income make that amount of money and they do not pay taxes.